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Renewable Energy Standard

30 V.S.A. § 8002-8005 establish a renewable energy standard (RES) that Vermont electric distribution utilities (DUs) are required to meet. Under the RES, Vermont’s DUs must acquire and retire a minimum quantity of renewable energy attributes or Renewable Energy Credits (RECs), and to achieve fossil fuel savings from energy transformation projects. The requirements of the RES are broken down into three categories, or tiers, as follows:

Tier I - Total Renewable Energy

Tier I requires DUs to retire qualified RECs or attributes from any renewable resource to cover at least 55% of their annual retail electric sales starting in 2017. This amount increases by 4% every third January 1 thereafter, up to 75% in 2032. A utility can also make an Alternative Compliance Payment (ACP) in lieu of retiring Tier I RECs.

Tier II – Distributed Renewable Generation

Tier II requires DUs to retire qualified RECs equivalent to 1% of their annual retail sales starting in 2017. Tier II–eligible resources include renewable generators with a nameplate capacity of less than 5 MW, commissioned after June 30, 2015, and connected to a Vermont distribution or sub-transmission line. The Tier II requirement increases by three-fifths of a percent each year, up to 10% in 2032. Like Tier I, a utility can make an ACP in lieu of retiring Tier II RECs. Pursuant to 30 V.S.A. 8005(a)(1)(C), Tier II resources also count toward a DU’s Tier I requirement. Additionally, to the extent that a DU is 100% renewable, the DU is not required to meet the annual requirements set forth in Tier II but is required to accept net-metering systems and retire the associated RECs.

Tier III – Energy Transformation

Tier III requires DUs to achieve fossil fuel savings from energy transformation projects or retire Tier II RECs. For Tier III, the RES requires savings of 2% of a DU’s annual retail sales in 2017, increasing to 12% by 2032, except for municipal electric utilities serving less than 6,000 customers, which have a delayed start and no obligation until 2019. Energy transformation projects implemented on or after January 1, 2015 are eligible to be counted toward a DU’s Tier III obligation. A utility can also make an ACP in lieu of achieving sufficient fossil fuel savings or retiring Tier II RECs. ACP payments are made to the Clean Energy Development Fund (CEDF), which “promotes the development and deployment of cost-effective and environmentally sustainable electric power and thermal energy or geothermal resources for the long-term benefit of Vermont consumers” (30 V.S.A. § 8015(c)).

Energy transformation projects include weatherizing buildings; installing air source or geothermal heat pumps, biomass heating systems, and other high-efficiency heating systems; switching industrial processes from fossil fuel to electric; increased use of biofuels; and deployment of electric vehicles or related charging infrastructure. The Tier III requirements are additional to the Tier I requirements and an ACP option is available for Tier III compliance.

Background

In 2015, the Legislature, under Act 56 (relating to establishing a renewable energy standard) directed the Public Utility Commission (PUC) to implement the Renewable Energy Standard (RES) program, to take effect on January 1, 2017. Among other things the Act requires Vermont electric Distribution Utilities (DUs) to acquire and retire a minimum quantity of renewable attributes or Renewable Energy Credits (RECs), and to achieve fossil fuel savings from energy transformation projects.

On June 28, 2016, the PUC issued a final order in Docket 8550 implementing the Renewable Energy Standard. RES rulemaking is ongoing in Case # 18-3810-INV.

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